Over and Short

What Is Over and Short?

Over and short—often called "cash over short"—is an accounting term that signals a discrepancy between a company's reported figures (from its sales records or receipts) and its audited figures. The term also is the name of an account in a company's general ledger—the cash-over-short account.

This term pertains primarily to cash-intensive businesses in the retail and banking sectors, as well as those that need to handle petty cash. If a cashier or bank teller errs by giving too much or too little change, for example, then the business will have a "cash short" or "cash over" position at the end of the day.

Key Takeaways

  • In accounting, over and short—or "cash over short"—implies a disparity between a firm's reported figures and its audited figures.
  • It's also the name of the account where the firm records these cash discrepancies.
  • Being over and short occurs most often in retail and banking.

An Example of Over and Short

Assume that I work as a cashier at a sporting goods shop. I rang up a $95 pair of yoga pants correctly for $95, but I miscounted the cash I received for the pants. The customer unwittingly gave me $96 for the purchase, an error we both failed to catch. The accounting system will show $95 in posted sales but $96 of collected cash. The one-dollar difference goes to the cash-over-short account. The journal entry for this sale would debit cash for $96, credit sales for $95, and credit cash over short for $1.

The opposite is true for transactions that produce cash shortages. Assume the same situation except that I receive $94 instead of $96 for the sale. Now cash is debited for $94, the sales account is credited for $95, and cash over and short is debited for $1.

What Causes Cash-Over-Short Incidents?

Internal tampering could cause a business to be over and short in its accounting. Usually, however, the cause results from simple human error. An employee ringing up a sale incorrectly or making another error, like miscounting cash, can generate a disparity between the sales price of the merchandise, the amount collected, and the amount recorded in the accounting system.

The Function of a Cash-Over-Short Account

A firm should note instances of cash variances in a single, easily accessible account. This cash-over-short account should be classified as an income-statement account, not an expense account because the recorded errors can increase or decrease a company's profits on its income statement.

A company may use the data in the cash-over-short account to determine why cash levels are in discord and try to reduce the number of cash-over-short occurrences by using better procedures, controls, and employee training. Thus, this account serves primarily as a detective control—an accounting term for a type of internal control that aims to find problems, including any instances of fraud, within a company's processes.

Take the Next Step to Invest
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.